February 13, 2013

Imagine being able to rewind to the 1990s and help your news organization make key decisions — and create new habits — to help prevent a landslide of layoffs and enable the business to thrive on the Internet. That’s the opportunity we have today with mobile, the second tidal wave of change about to collide with the news industry.

To compete in this new world, news organizations must adopt a “mobile first” mindset and create sustainable mobile businesses. But many newsrooms believe that a “mobile, too” approach will be enough, as advocated by Business Insider’s Henry Blodget.

“The reality is that we live in a multi-screen world, not a ‘mobile world’ that operates parallel to a ‘desktop world,’” he writes in a blog post. “For some services, such as news and information, the laptop/desktop screen is still by far the most dominant screen. So abandoning that screen, or designing for another screen first, just doesn’t make sense.”

Blodget’s view is matched by many in journalism, but it misses the big picture. Here’s why.

1. A responsive design isn’t a mobile strategy

The mobile revolution isn’t about design and distribution as much as it is about revenue disruption.

Rewind to 1996 when newspapers enjoyed fat profit margins, and two startups made their debut on the early Internet. One company all but destroyed newspapers’ biggest revenue driver, and the other ended up generating more advertising revenue — most of it local — than the entire newspaper business combined.

Both Craigslist and Google created new business models enabled by the technology and scale of the Internet. In the same way, mobile is enabling new business models and use cases. Just like the mid- to late 1990s, we’re at the leading edge of the ensuing disruption.

Two big drivers of mobile disruption are geolocation and digital payments. Taken together, they have the capability to disrupt local advertising all over again. The right technology with the right execution will be able to drive nearby consumers into local businesses and anonymously track their actual purchases at scale, closing the loop like never before. No more guessing about ad effectiveness. For local media organizations, that has the potential to destroy your business.

There’s a narrow window of opportunity to invent — or invest and acquire — disruptive mobile technologies and business models that could eventually sustain, grow or even multiply your revenue. A responsive design is a must for today’s news sites, but it’s not a mobile strategy.

2. Mobile will not only surpass the desktop, but begin to erode it

“In the next 12–18 months, many news organizations will cross the 50 percent threshold where more users are visiting on phones and tablets than on desktop computers and laptops,” explains Fiona Spruill, editor of emerging platforms at The New York Times. “The numbers speak for themselves.”

It’s already happening at the Guardian during certain times of the day. Facebook announced in its last earnings call that it crossed the threshold. At Breaking News, where I work, mobile skyrocketed over desktop early last year.

Mobile will become the dominant screen as early as next year. If you’re planning and building a news experience right now, it’s highly likely that it will be visited primarily by mobile users over its life cycle. By extension, mobile first is already here.

But here’s where it gets really interesting. An increasing number of users are visiting brands solely via mobile devices. Over the last year, Facebook said nearly 100 million more people started using the social network only on mobile, never touching the desktop.  Google has reported four straight months of declines in desktop search as mobile explodes.

As news organizations cross the mobile threshold and beyond, this growing “mobile only” crowd will erode desktop audiences. Many news organizations will see desktop traffic flatten, and in some cases, begin a long decline.

3. The desktop decline will pressure news revenues

There’s a huge gap in advertising yield between desktop and mobile experiences: $3.50 versus $0.75 in average CPMs, according to Kleiner Perkins’ Mary Meeker. Mobile is growing so quickly, the explosion in available inventory is depressing advertising rates.  Ad agencies typically lag demand, which means this gap won’t be bridged anytime soon.

As audiences shift, the industry will be faced with more revenue pressure unless news organizations can create new mobile revenue streams to compensate. In many ways, this is similar to the shift from print to the Web. Just porting one business model to the other isn’t the solution. Traditional display advertising on mobile devices makes up a very small, declining fraction of total revenue.

And then there’s Google and Facebook. Taken together, they already control nearly 70 percent of all mobile advertising dollars, according to eMarketer. Empowered by geolocation, local search is a huge business. Google recently rolled out a new product that enables advertisers to bid on mobile searches that happen physically near their businesses (i.e. target your restaurant ad to anyone within a mile radius who searches for “restaurant” during evening hours.)  It’s hard to compete with such targeted products with traditional banner ads, and both Google and Facebook are working hard at closing that local advertising loop for the first time in history.

Some newspapers are beginning to see some traction from pay meters, which could hold promise for mobile subscriptions. But most news organizations are still in experimental phases on the mobile front, and there’s a very big dependency on Apple, Google and Amazon as apps continue to grow in popularity. Rapid experimentation and investment is a must.

4. News needs to solve problems

A study by Flurry in November found that the news category only accounts for 2 percent of total time spent on mobile apps. Social apps gobble up 26 percent. Facebook alone accounts for 23 percent of all time spent with mobile apps, according to Comscore in December. That beats every news organization’s app combined by a long shot.

As Facebook (and Twitter) grow in time spent – and since both are populated with plenty of news – they’re increasingly competitive with news organizations’ mobile experiences by sheer volume.

As a result, simply extending a news organizations’ current coverage into mobile isn’t enough. We need to solve information problems for our users and drive measurable revenue for our advertisers. Mobile is not merely another form factor, but an entirely new ecosystem that rewards utility.  Flipboard is a classic example of solving a problem (tablet-based content discovery) while The Daily is an example of a product that did not.

“The key insight from thinking about your business this way is that it is the job, and not the customer or the product, that should be the fundamental unit of analysis,” said Clayton Christensen, David Skok and James Allworth in a Nieman report. “This applies to news as much as it does to any other service.”

“The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems, preferably problems you have yourself,” explains Y Combinator’s Paul Graham. “By far the most common mistake startups make is to solve problems no one has.”

5. Technology companies are mobile first and spending like it

Last year, Google proclaimed it was mobile first. Then Facebook. Then Yahoo. Twitter is already mobile first. These companies are investing at an unprecedented scale, acquiring mobile companies and beefing up development teams.

Meanwhile, there’s a new onslaught of “mobile first” and “mobile only” startups spanning communication, news, advertising and services. They’re attracting hundreds of millions of investment and some of the brightest minds in the business.

I don’t know about you, but a “mobile, too” approach worries me when the technology world is investing so deeply in mobile first innovation. Didn’t we learn this before?

This is why news organizations should shift to a mobile-first approach immediately. This doesn’t mean we ignore the desktop, but prioritize mobile over it — make mobile the default everything. When brainstorming a new product, start with a phone or tablet design and work backwards to the desktop. Set performance goals based on mobile performance over desktop. Conduct research that emphasizes mobile over desktop behavior. Put mobile numbers at the top of analytics reports. Compare competitive performance on mobile numbers first, desktop second. We need to immerse ourselves in devices and become a student of the industry.

We also need to talk less about social media and more about mobile. In many ways, social media has become the great distraction, diverting journalists’ attention away from radical change in our business. I’m guilty of this, too. Don’t get me wrong: social media is important, but let’s not forget that social platforms increasingly compete for audience attention and ad dollars. Growing our own mobile experiences should be the top priority.

Above all, we need to invest and experiment like never before. Whatever you’re spending now, triple it.

“When the Web was new, many of us went online with creativity and energy,” says Regina McCombs, who teaches mobile at Poynter. “Now, faced with even bigger potential and pitfalls for developing — or losing — our audience, most of us are getting by with as little investment as we can. That’s scary.”

If you’d like to learn practical ways to become a mobile first newsroom, sign up for Poynter’s upcoming seminar, “Mobile-first newsgathering and publishing.”  McCombs, Sara Quinn, Damon Kiesow and I will teach the course. There’s not much time to apply: registration ends this weekend.

Cory Bergman is the General Manager of Breaking News, a mobile-first startup owned by NBC News Digital.

Replay our chat about this topic here:

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Cory Bergman is the General Manager of Breaking News, a mobile-first startup owned by NBC News Digital.
Cory Bergman

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